Mobile carriers and consumers are all pirates in South Africa

A new report on digital content in South Africa has proposed the same kind of “three-strikes” penalty system being levelled against persistent freeloaders in other countries.

But just as significant an immediate problem is how some of the biggest online music services in the nation are also breaking copyright law.

The just-published Copyright Review Commission’s 223-page report tells the government that South African content makers have no optimism about digital exploitation because only 14 percent of mobile services have licenses for the music they offer, while their umbrella body refuses to make them pay the local mechanical royalties collector. Only one, Vodacom, pays royalties for using sound recordings:

“Wireless Application Service Providers (WASPs) have been selling ringtones since 2000. An overwhelming majority … have paid no royalties … and have profited 100% from the digital exploitation of authors’ copyright works for almost a decade.

“Their continued use of composers’ works without paying royalties is unauthorised in terms of the Copyright Act. The majority of mobile providers (and, by implication, consumers) are dealing in infringing sound recordings and may be held criminally liable for copyright infringement.”

The commission recommends royalty collection societies should sue mobile operators for their money, and it calls for bans on ISPs who do not recompense artists.

Spending on physical music in South Africa is forecast by PwC to dip by 10.4 percent per year up to 2014, with little prospect of a digital revenue replacement in what currently appears a dysfunctional market.

Music performers are not able to make anything from interactive streaming and webcast services because current law does not define such a platform. “It is clear that South African copyright law lags behind in the digital era,” the Copyright Review Commission laments.

But the commission does not lay all of the blame on structural deficiencies. It also cites a study which claims 3.6 million songs are downloaded illegally each month in South Africa, worth R36 million ($4.3 million) monthly and R432 million ($51.6 million) annually. 2011 digital music sales in South Africa were just $6.1 million, six percent of the total.

The commission recommends changing national law and the terms under which ISPs can act “to require ISPs to adopt a graduated response for repeat infringers culminating in the suspension of access services of an individual” who persistently downloads material illegally.

That would see South Africa join the UK, France and New Zealand amongst countries which are implementing or have implemented monitoring, warning and technical sanctions against offenders.

The state of the South African market suggests it is also one ripe for exploitation by services that are willing to play by more of the rules than existing local operators. Germany’s Simfy just launched in the country, and Spotify is also thought to be interested.